Wednesday, March 30, 2011

There are two big mental transitions that take place when you own your business. Transitions from what? Well, if you've got the discipline developed from successfully working for others, you've been trained to understand the value of money and time in a very specific way. Our culture reinforces these essentially corporate values with every TV show, song, and public institution, despite half of business in this country being small business. Let me explain.

Money: Understanding the role of money took me several years to grasp. I've gone over this before, but I came from the Information Technology field, where we liked to spend a lot of money, often at the behest of others who had done some sort of cost-benefit analysis about how tech could make or save them money, usually without IT providing any input. Rarely were we asked to add value to the business itself, which to finance people would be like giving the hen house keys to the fox. Did these clever overseers know what they were doing? 50% of the companies I worked for failed, so you tell me. Sometimes I think they decided what to do by throwing darts at a board full of ideas.

The bottom line is when you work for someone else, you're spending their money. When you run your own business, you're spending you're money. Mentally, this is really hard to grasp. When the expenses go up, or the government foists a new tax on you, they're taking your money, their hand is in your pocket. It's the same pocket you use to feed your family. This "your money thing" took me quite a while to grasp, along with adjusting the metrics in spending my money. In the corporate world, money is more strategic. There is cost-benefit analysis, justification for spending large sums. In a small retail business, margins are razor thin. Your patron saint of economics is Ben Franklin rather than Ben Bernanke. A penny saved is a penny earned is your mantra.

In a nutshell, running a store is a process of constantly beating down expenses with your fists while simultaneously raising your sales, your hands high above your head in retail hallelujah. Try the motions a few times. I call it retail aerobics. This has been mentally challenging for me. Some will tell you not to take it personally, it's only business. I've learned that attitude is either from a nine to fiver employee or an enlightened business owner. Indeed, not taking it personally is step three in the stages of owning your money: not understanding it's your money is step one, followed by understanding it's yours and making it personal, and finally, stepping back and not taking it personally. I'm working on step three. I'm at the stage where I get enraged when I'm swindled, rather than a more relaxed detachment that I need to cultivate. Stage three looks a lot like stage one, but with some wisdom and mindfulness of what's really going on.

Time: We've all been taught that working harder will give you more reward. In the work world, at lower levels it usually means direct compensation for your time. In the corporate world, some bosses will judge their staff on hours worked, rather than accomplishments. Those really good at their jobs are often bored with the work day time constraints, or worse, they see the structure of their compensation re-adjusted to make up for their excellence, a common occurrence with sales people.

In reality, most people can't focus for more than about 5-6 hours on a project before they're shot, and a lot of the cube-based work world is spent screwing around. Business owners are painfully aware of this, both with their employees and their own time. When their businesses begin to falter, they are often told to just put more time into their business, work an extra ten hours a week. That really doesn't work. The key, as many will tell you, is to work smarter, not harder.

Working smarter means working on process, fixing the dozens of little things that will make your small business better. The mental transition from working in your business to working on your business is what I grapple with. The thought exercise I've used lately is the business development day. What if I could take one day off a week and use it away from my business, in business development. What would that look like?

Much of what I do running a small business seems passive. What could I accomplish with some dedicated, active engagement and self promotion? What would I even do with one day off a week? The cost-benefit, again, a dangerous, non Franklinian concept, would require me to increase my sales beyond what it would cost to hire an employee to work that one day a week. Calling it $10/hour, could I spend four days a month to offset that cost and build the business? Do I even know how to calculate that? We're not talking $240/month in gross sales to offset that employee, we're talking about profit. With a 5% profit margin, that's more like $4,800. Re-stating the question, if I took one day off a week, could I generate $4,800 in sales each month?

The answer? I don't know, because I don't know how. Some of this is clearly marketing. It might mean some direct marketing, perhaps working with other small business by exchanging flyers. It might be more innovative, like meeting with schools or parent groups to organize and run a game night. It might be more abstract, like meeting with various small business groups that day to network and trade tips or possibly taking a class on accounting or marketing at my local community college. I might visit other stores to see what they're doing and build relationships, something I never do.

The bottom line is nobody teaches you how to run a small business and there's no magical degree program with that in mind. We are taught to define our time in 8-hour blocks, with 30 and 15 minute breaks. Breaking out of that time mold is dangerous. When I think about my business development day, what do I do? I put it back into 9-5 context, because that's what I'm familiar with. A penny saved is a penny earned, says the little Ben Franklin on my right shoulder, whispering in my ear that such a day away is a bad idea. Then the devil on my left shoulder, ghost of corporate experience, whispers that penny wise is pound foolish. Do a proper cost benefit analysis. Throw some darts! My business processes are strong enough to step away from my business, but to do what? That's my dilemma in year seven.

Monday, March 28, 2011

The Q4 2010 numbers for ICV2 were released today. We've increasingly found our numbers pretty much in line with theirs. Let me just say Q4 sounds like a million years ago as we approach April. Here's how we fared and how it's looking for Q1 2011.

Top 5 Roleplaying Games – Q4 2010

ICV2

BDG

1

Dungeons & Dragons

Dungeons & Dragons

2

Pathfinder

Pathfinder

3

Dark Heresy/Rogue Trader/Deathwatch

Dark Heresy/Rogue Trader/Deathwatch

4

Dragon Age

Dresden Files

5

Mutants and Masterminds, inc. DC

Diaspora

I can tell you that Pathfinder has kicked the bejeezus out of D&D in Q1 of 2011, due to weak releases by Wizards of the Coast. With twice as many Pathfinder releases in 2011, I expect that to continue. Eclipse Phase caught fire after it got previewed in our monthly RPG club. Sales fit somewhere in the middle of all those Fantasy Flight RPGs. The Leverage RPG out-sold Dresden Files, but both were in single digits.

Top 10 Hobby Channel Collectible Games – Q4 2010

ICV2

BDG

1

Magic: The Gathering

Magic: The Gathering

2

Yu-Gi-Oh! TCG

Yu-Gi-Oh! TCG

3

HeroClix

D&D Miniatures

4

World of Warcraft

Pokemon TCG

5

Pokemon TCG

Naruto CCG

6

D&D Miniatures

World of Warcraft

7

Legend of the Five Rings CCG

Axis & Allies

8

Naruto CCG

9

Star Wars CMG

10

Axis & Allies

The big surprise in Q1 was how we sold out of Heroclix on release with quite a bit of demand still left. Last time we tried Heroclix we brought in half a dozen booster packs and it took months to sell them. This time we bought quite a few bricks and a league kit and they evaporated in one day. We'll be somehow running Heroclix events starting in April, despite there being no supply of product anywhere. We're also re-launching Legend of the Five Rings CCG upon the next sets release.

Top 10 Hobby Board, Card, Family Games – Q4 2010

ICV2

BDG

1

Settlers of Catan

Forbidden Island

2

Ticket to Ride

Settlers of Catan

3

Small World

Betrayal at House on the Hill

4

Munchkin

Dominion: Intrigue

5

Dominion

Atlantis

6

Dixit

Castle Ravenloft

7

Axis & Allies

Dominion: Prosperity

8

Carcassonne

Arkham Horror

9

Pandemic

Dominion

10

Forbidden Island

Dixit

What gets overlooked mostly in these rankings is the success of the FFG living card games. They don't sell enough to make it onto the hot lists, but we regularly go through about ten Game of Thrones chapter packs, seven Warhammer Invasion and even one or two Call of Cthulhu packs.

The top Q1 board games are Mansions of Madness (FFG), Wrath of Ashardalon (WOC), Settlers of Catan (MFG), Betrayal at the House on the Hill (WOC) and Nightfall (AEG). Q1 has seen our Euro game sales fall off pretty heavily.

Top 5 Non-Collectible Miniature Lines – Q4 2010

ICV2

BDG

1

Warhammer 40k

Warhammer 40k

2

Warmachine

Warhammer Fantasy

3

Warhammer Fantasy

Warmachine

4

Hordes

Malifaux

5

Malifaux

Hordes

This is the most steady of categories, with not much news except at the basement, where Dystopian Wars failed to gain traction due to the inability to supply the US with rulebooks and models simultaneously. I gave up on them in exasperation. There is serious resistance from customers to anything new in this category right now. I can live with that.

Saturday, March 26, 2011

My gaming world of choice, like many people, is the one I started with. In my case, that was Greyhawk. I recall staring for hours at the giant fold out map from the Greyhawk Gazetteer that was taped to my bedroom wall. Every hex held the potential for adventure. For many people, especially the younger crowd, their world was Faerûn, AKA the Forgotten Realms. By looking at the sales of our D&D 4E Dark Sun books, many of which were sold to people I know don't even play 4E, Athas holds some nostalgia. Campaign settings are really important to gamers, so the Paizo world of Golarion had some awful big shoes to fill. Some of the Paizo designers worked on Greyhawk, so my guess is they have similarly strong feelings towards setting design. In any case, how I feel about Golarion and my personal setting baggage will color a lot of what I say about it, and your baggage will likely flavor how you'll receive it.

What strikes me most about the Golarion setting is that it's designed to be functional. Here's my confession: I honestly don't care much for the Golarion "good guys," the baseline nations and cultures that underlie the place. However, and this is an exceedingly big however, man is Golarion chock full of adventuring potential. While I enjoyed the many semi-realistic nations of Greyhawk, adventuring in that setting was on the margins, in the interstices of cultures and nations.Golarion, in contrast, has great swaths of African-like jungle, Egyptian-like desert ruins, frosty barbarian reaches, frightening ocean going trade routes, seas of quicksand and Atlantis-like lost worlds. Adventure staring you right there in your face.

From a GM perspective, Golarion is incredibly useful, even if as a whole it doesn't quite come together like what I'm used to. However, as a mature gamer, I'm free and capable of using what I like and discarding the rest (cough, Numeria, cough). I wish I could bottle and sell that sentiment. I mention this because many people I know discount Golarion because it doesn't have the feel they're looking for. I'm suggesting they take another look and consider the parts, even if the whole is less appealing. There are some brilliant bits.

So what about the actual Inner Sea World Guide? I've been reading the various Pathfinder Chronicles books, such as those on religions, factions, races and even the smaller gazetteer, so I was hesitant to pick this up for fear there would be a lot of duplication. This can happen with some of the books, especially when you endeavor to become a SME (Subject Matter Expert) on one Golarion topic or another. In the case of the Inner Sea World Guide, there is some duplication, but I was pleasantly surprised to find a lot of new stuff I hadn't read before in just about every category.

Sometimes new things are small, like how the section on races provides recommendations on non-standard PC races and ones to consider carefully, or how how the deities are assigned regional origins, making them feel much more organic than before. Sometimes additions are huge, like the inclusion of First World (faerie realm) entities or Cthulhuesque gods, or the speculative map of the rest of the world on page 204. That map alone was what put the book on my radar. How about a cosmology that includes inhabited planets? There is some "wow" stuff here for sure, even if the descriptions are sometimes place holders for future books rather than complete entries.

Like the enormous and exhaustive Inner Sea Regional Poster Map that Paizo recently published, the world guide feels equally complete. You get the sense the team scoured the over 150 Paizo products to include all the content on the section in question. There are languages you've probably never heard of, an exhaustive section on the gods, and of course the gazetteer section itself, which covers 182 of the 300+ pages. This is the section that really shines, and probably why you're likely to buy it. It's incredibly dense and encyclopedic, while still being delightful to read straight through.

If you aren't a completist and don't plan to buy every Pathfinder setting book, this tome will serve you well as the ultimate gazetteer, and a highly functional guide to the cultures of Golarion. In this sense, The Inner Sea World Guide is an ideal "core book" for running a Golarion campaign, including the adventure paths. It puts a lot of the rules and options into cultural perspective, which can get lost, especially amongst your power gamers. Besides being the definitive resource on geography and culture, you also get about 50 pages of rules content, including updated prestige classes, new spells, equipment, magic items and monsters. Like most Paizo products, this is highly functional content, put there for a reason, as opposed to filler. This is the typical Paizo value add.

The Campaign Setting that The Inner Sea World Guide replaces was going for over $200 on Ebay before this release. It was a 3.5 book with content that needed to be updated for the Pathfinder RPG. The new book includes an addition 64 pages plus a bunch of new content added when older content was replaced or eliminated, often because it was covered elsewhere when the Pathfinder RPG was first published. The book is $49.99, but it's a treasure trove of content you're likely to reference for years to come, or read through completely for the fun of it.

Tuesday, March 22, 2011

Established game stores eventually get elaborate stories and rumors surrounding them. These stories are usually about the origins of the store. Most are laughable. They're usually excuses to explain away their success. One Bay Area store was allegedly run by dot com millionaires. I emailed one of the millionaires in question and he informed me he was sitting at his desk eating a tuna fish sandwich he had brought from home, definitely not his first choice of cuisine if he was a millionaire.I'm a PB&J guy, by the way.

The most recent rumor about our store was that we are part of a larger chain of stores. The "chain of stores" rumor is not surprising, since I do try to make the place look professional. I once came down hard on a pair of con artists after they thought they could pull a check scam on who they thought was a typical corporate store manager. I told them where they could go, pointed out the cameras and they scurried off like the vermin they were.

Being called a chain store in the Bay Area is a kind of slur. There's a Bay Area crunchy granola tendency to spurn chain stores. Unlike my friends and relatives in Southern California, who regularly mention chain stores in their status updates, there's a tendency in the Bay Area to see them as, at best, a necessary evil.

Positioning your opponent as big is also a good business strategy, ala Guy Kawasaki. Americans love the underdog and love to hate the big guy. Being labeled a chain store kills your indie buzz and sets you up to be knocked down. That's not to say I don't want more stores. In fact, I decided this week that a second store is desirable, if not close to totally impossible to pull off.

In any case, you can read my background here. We've got several investors in the business, but I'm the majority owner, or shareholder I guess it's called, since we just converted to a corporation. Nobody was or is rich. I was a dot-com guy at one point, but never got any value from those stock options. There is but one Black Diamond Games.

Saturday, March 19, 2011

Anyone who uses Facebook for their diverse business has to wonder if what they post has any relation to the interests of their customers. As I began to focus away from Facebook and towards Google Adwords, I was surprised to learn that the actual search terms people looked for in relation to my business had very little to do with what I was trying to actively advertise. Poker, bingo and Pokemon were our top search terms, things that were not top games in the store. Meanwhile, I had carefully crafted Facebook ad campaigns for my top selling games, that few people on Google ever searched for. Now that Facebook has some very basic analytics for looking at impressions, it has become painfully obvious that what I post on the store page and its frequency is not always aligned with the interests of the readers.

Board games make up the majority of posts, mostly because there are just so damn many of them. With over 1,000 in stock, and steady rotation, it's not unlikely on any given day that we received a new one. And why not advertise it? Well, apparently because board games are the least interesting thing to our Facebook fans, most likely due to demographics (an older crowd).

RPGs are likewise an older group, although when you pull out Pathfinder and D&D and look at them individually, there is increased enthusiasm for those top brands. Pathfinder enthusiasm is higher than D&D, despite sales of D&D being 2:1 in comparison. We know that and it's what drives a lot of posts about Pathfinder.

Meanwhile, our very young Yugioh crowd, which gives the impression of not paying attention to anything we say, including life saving instructions, actually pays a LOT of attention to our Facebook Yugioh posts. Again, there's a big demographic component to that, but there's also an awful lot of them. This contrasts to our Magic posts. Magic is our number one game in the store, but with an older base. Relative staff indifference to Magic has always been driven by a perceived corresponding lack of enthusiasm of most Magic players to what we do in the store. It's what makes us think they're mercenary, right or wrong. I wonder if it's how most approach the game, as a pastime rather than a hobby. Does the casual golfer really care about the daily happenings in the local sporting goods store? Probably not.

What you don't see here are the quantities of posts. CCGs get much fewer posts while "deserving" far more based on these findings. Board games, as mentioned, are hugely over-represented. RPGs likewise get constant exposure without a commensurate level of interest. If we actually posted on Facebook based on sales and Facebook interest, you would hear an awful lot about CCGs and miniatures, especially Yugioh and 40K. Mis-aligning our marketing with the interests of our customers is something we do at our peril.

What gets the most impressions? The number one top post is a photo of our board game clearance cart. Mmmm, I love the cart. Second was this weeks scoop photo of the Pathfinder starter box I took at the Gama Trade Show. That's right, a cart of clearance board games got more exposure than a photo of a pre-production game that got re-posted far and wide. Also, anything specific to the store and not a new release gets more exposure than straight business marketing. This is what the experts will tell you and they're right. It's tempting to put out every new release on the feed, but there's an obvious fatigue and lack of interest in doing so.

Finally, all these impressions are pretty high for a game store and that comes from our very high fan count, third in the world for game stores. That high fan count, over 1,500, likely includes a lot of folks who have only the slightest interest in what we say. Sometimes I'll drill down on the dozen or so "likes" on a post, looking at the user profiles, only to learn that none of them are residents of California. I'm glad they like what we're saying, but I can't deceive myself that it means anything.

Tuesday, March 15, 2011

In 2009, I was standing in my role-playing department, wondering why Dungeons & Dragons wasn’t selling. We had several months worth of unsold D&D supplements. I was playing D&D at the time and they all seemed pretty good. I tried to figure out the problem, asking staff and customers, and it turned out it was because of Dungeons & Dragons Insider, the D&D online subscription service where you get the contents of all the books for $6 a month. Why spend $30 a month on the new D&D book when you can have ALL the books for $6?

This made me a bit upset because I realized I had put D&D up on a pedestal. It got special treatment. My performance metrics were waved for the sake of carrying the full line. The books were placed on special racks. RPGA got preferential treatment. Wizards of the Coast was supposed to be my friend. They didn’t sell direct, which gave them special status in my mind.

I mention this because some retailers won’t support Pathfinder because they feel Paizo is competing with them with direct and subscription sales. This is true, but all publishers are exploring multiple sales channels. It’s not a good enough reason to ignore something that could be making you a bunch of money and making your customers happy.

My argument is NOT that we should knock D&D off its pedestal, removing its special treatment. My argument is that you can be very successful selling Pathfinder, if you elevate the game to the same status as Dungeons & Dragons. It’s a big pedestal. There’s room up there for both.

WHY

Top 5 Roleplaying Games – Q3 2010

Title

Publisher

1 (Tie)

Dungeons & Dragons

Wizards of the Coast

1 (Tie)

Pathfinder

Paizo Publishing

Pathfinder is on the rise. At the same time, most agree that D&D is faltering. As retailers, we don’t have to choose. We can and should support both games. These ICV2 numbers reflect what many distributors can tell you: Pathfinder sales are as strong or stronger than Dungeons & Dragons. That’s what’s going on now. But what about the future?

THE FRIDGE IS THE FUTURE

This is a photo of the 2011 releases for both Dungeons & Dragons (left) and Pathfinder (right). We have this posted on our drink cooler at the store. It shows about 12 releases in 2011 for D&D with 24 releases for Pathfinder. So if both games are tied, all things being equal, 2011 should see Pathfinder exceed D&D sales.

HOW: SHIFT IN PERSPECTIVE

Paizo comes out of the D20 glut and must shed the stigma that goes along with that. The key is to move it mentally from a third party publisher, the lowest of lows, to a first tier publisher like Dungeons & Dragons. You do this by giving it the resources you give D&D.

HOW: CARRY THE FULL LINE

Carry the full line. This includes every rulebook, supplement and adventure, as well as GameMastery products like flip mats and item cards. Why? You become the destination store and remove selection as a reason to buy online.

Something funny happens when you carry the full line. Sales across the line accelerate. Map packs and other items that sat on the shelf for a year before we stocked deep, now sell 3-4 a year. The reality is that two-thirds of our sales are rulebooks, half a dozen hardcover products, but we were only able to sell those rulebooks in large quantities by having the full line to back it up. If you sell Dungeons & Dragons, you probably experience the same thing. You can’t just carry core rulebooks and expect to have strong sales. The supplements drive the whole line.

HOW: TOP OF MIND

When customers think Pathfinder, they should think of your store. It’s a combination of carrying the full line, merchandising the product in your premium spaces and marketing the product equally. When customers think of Pathfinder, make them think of you first, before Paizo, Amazon or your competitors. They need to know you’ll have the item they want every time.

HOW: ORGANIZED PLAY

Pathfinder Society organized play is popular among the fans. They enjoy the format and the quality of the adventures. Promote it like the RPGA, but give the players a choice. Don’t schedule them at the same time, for example. Pathfinder players and especially Venture Captains are amazing evangelists for their game.

HOW: THE RIGHT FIT

You’re an arms dealer in the version wars. Rather than being a cheerleader for one system, find the system that fits the customer and don’t give them an excuse to complain or get into pointless version discussions. Sell Dungeons & Dragons to those who want a BASIC, simple game and sell Pathfinder for those who want a more ADVANCED experience. When you offer good options, the problem to be solved is those who won’t move forward, and that’s where we excel, selling the excitement of a new game.

THE PAYOFF

Without Pathfinder, last years “D&D” sales would have been the lowest for us in six years. Instead we saw an increase in RPG sales. If you’re seeing your D&D sales tanking, Pathfinder might be what you need to shore them up.

PAYOFF: HIGH TURNS - 4.6

Pathfinder has turn rates comparable to Dungeons & Dragons. While only six of the over 160 Pathfinder products account for two thirds of our sales, overall line turn rates remain high at 4.6/year, compared to 5.1 for D&D. As I mentioned, performance of weaker merchandise accelerates when the full line is present. This is $2,633 at retail, which means for my store, it was $12,000 in sales from virtually nothing a year before.

So the bottom line? Sell and support Pathfinder like Dungeons & Dragons and you should see good results.

Thursday, March 10, 2011

We're all getting older. You with your white hair and record collection and me with my growing belly and books made of paper. I mention this because both our interests are mostly in the past. For games, that means the classics for you. Backgammon with real ivory pieces, cribbage boards made with rare hard woods, and chess sets constructed from the bones of velociraptors. Me, I want to run an 80's era fantasy store entirely devoted to Dungeons & Dragons and the games of my own youth. You know, the games you told me would lead to devil worship and suicide when I was a kid. I'm still here! Satan be praised! (kidding). We all want what we can't have.

Our games have a lot in common, actually. They book-end my store. Yours are in the front, letting all who walk in know that this is a real game store, not one of those high fallutin' video game stores. In reality, classic games are in front because nobody wants to steal them. It's also an area known as the decompression zone, invisible to most people and thus a great space for slow selling stuff. My games are in the back corner, hidden away until you take the Tolkienesque journey to the far reaches of the store. They're back there to avoid frightening you. Some can't remember why RPGs are bad, but they're certain there was a reason (see above). In fact, we sell classic games like newspapers, sitting up front while we sell RPGs like porn video tapes, squirreled away in the back. How much of a dinosaur do you have to be to engage in either of those mediums?

In my case, the world has moved on. Most kids nowadays, sophisticated and multicultural, can't identify with the European fantasy of my youth. They find it quaint and reeking of The Other. In your case, the cost of goods and diminishing of natural resources means your games ares made in China, and probably constructed of plastic. We hunted elephants to near extinction for those ivory game pieces. Yeah, they're pretty. I know. Hand crafted I can still get you, but it's expensive and you don't want to pay for that.

Blame the Wal-Martization of this country and the search for ever lower prices. It's also what led to the poisoning of our children with ever cheaper toys. But I digress. In the case of classic games, you are just plain stuck. I can offer you the typical triad of options: good, cheap, available, with your choice of two.

That is why you see fewer stores carrying the games you love. My cross to bear is the diminishing role of the fantasy games I love, now accounting for single digit percentages of my own store sales. Alas, stores cannot stock what does not sell. If you do want to buy from me, I'm there for you, for now. It's out of a sense of propriety really, community service. Perhaps it's a nod to my father who played chess for Penn State or my wife who played cribbage in the bars of Alaska. As much as I dislike seeing the disappointment in your eyes, I know that there just isn't a solution to your dilemma, our dilemma.